Eti Soda looks to quell doubts over expansion plans

By IM Staff
Published: Saturday, 26 September 2015

The company, which is controlled by the Turkish conglomerate, Ciner Group, has seen its two major expansion projects delayed time and again for reasons to do with financing and construction issues. Now, Eti Soda says that its plans that will make Turkey the biggest soda ash producer in Europe by 2018 are back on track.

Turkish soda ash producer Eti Soda is a confident company. Despite lagging its own internal schedules and construction deadlines in recent years, Eti Soda, which is jointly owned by Ciner Group and Eti Mining Corp., now says that the business is on track.

Construction at the greenfield Kazan Soda project, which is being operated under the name Kazan Soda Elektrik, another Ciner Group enterprise, has now started. Infrastructure, including water, electricity and rail links were installed at the site in January 2015 and the development schedule is fixed, explains Tanzer Ergul, general manager of Eti Soda. 

The project is on course to achieve phase one capacity – 1.5m tpa, across three production lines – in the second half of 2017. Phase two, which will add a further 1m tpa soda ash capacity across two production lines, is expected to come online in H1 2018.

The Kazan project has been in the pipeline for some time, with delays raising questions over its future. According to Ergul, the reasons for the project being pushed pushed back a handful of times
over the last two years were holdups in obtaining the necessary financing and construction permits.

"A delay [to the current project timeline] is not expected, due to the ongoing construction schedule," Ergul says. "But it is an extreme project and every detail, like infrastructure, construction schedule and delivery of the main processing equipment, may have some effect on the overall schedule."

Like Kazan, Eti Soda’s Beypazari project was delayed for financial reasons. Construction of the facility began in October 2014 using the Chinese contractor, China Tianchen Engineering Corp. (TCC), on an engineering, procurement and construction (EPC) basis, with start-up targeted for early 2017. Once operational, Beypazari’s initial capacity will be 500,000 tpa soda ash and 100,000 tpa sodium bicarbonate. Final capacity will be 1.5m tpa soda ash across three production lines, 200,000 tpa sodium bicarbonate across two production lines.

When both sites are completed, the total combined capacity of Kazan and Beypazari will be 4m tpa soda ash and 400,000 tpa sodium bicarbonate. This will make Ciner Group, which controls 74% of Eti Soda and 100% of Kazan Soda, the third or fourth largest soda ash producer in the world – depending on expansions that take place elsewhere in the meantime.

Upsetting the supply balance?

In order to successfully introduce an additional 3m tpa soda ash to the global market within two years, Ciner Group needs to establish a position for this material. This will be difficult at first, says Ergul, but company is confident extra capacity can be absorbed from 2017.

"Absorbing the additional production into the market within a couple of years seems reasonable. There is no other considerable capacity addition [planned] in the soda ash industry, excluding China, although the expansion of the market is dependent on regional growth rates," he says. "Also, there are some plant closures [scheduled], because of environmental, technical or cost reasons." 

Owing to the US tradition of reporting soda ash production in short tons (s.tons), rather than metric tonnes, Ergul explains there is some confusion about Eti Soda’s position in the market relative to US producers, like Tronox.

"Market statistics show production rates in tons. The North American system uses s.tons, which equate to around 90% of the metric tonnes used in the European system. So there is some imbalance in the comparison. Another uncertainty is whether sodium bicarbonate capacities are included in the production figures or not."

Market position

Eti Soda is in its sixth year of operations and sales at Beypazari and has established a solid reputation with its customers. The company is a low-cost producer and although its main customer base lies in Western Europe, it has the logistical advantage of being able to export easily to South America and Asia.

"Eti soda produces natural soda ash from trona ore, via in-situ solution mining. These two parameters – raw material and mining technique – give a comparable advantage over synthetic soda ash producers and soda ash miners that use traditional mining methods," Ergul says.

"The logistics advantages of Eti Soda will be the same for Kazan, in terms of distance to ports and the sea transport capabilities
of Turkey."

Ergul says that Eti Soda is happy with its market position and "very confident" in its product quality, but adds that the company would like to establish a presence in other markets with small quantities of material.

One of the reasons customers want to work with Eti Soda is because of its low emissions status, compared to competitors, according to Ergul. Natural soda ash production creates only half of the emissions of synthetic soda ash manufacturing – an energy intensive process using salt and limestone as raw materials. This means that customers end up with lower overall emissions for their products, Ergul explains.

Soda ash prices

Soda ash prices have been strong so far
this year, although the prospect of overcapacity in China has cast some doubt over whether this can continue in the medium
to longer term.

However, Ergul is not concerned. "We do not foresee any price fluctuation in the medium or long term after Ciner Group puts more product into the market, due to regional market growth rates [compared to] production capacities," he predicts.

He also notes that soda ash prices tend to follow energy prices. "Energy costs are around half of soda ash production costs. That is why it will remain the same, as oil prices influence soda ash prices."